The Currency Clause Has Harmed the Economy Perhaps More Than Citizens

Professor at the Faculty of Economics in Zagreb and president of the Croatian Economic Society Ljubo Jurčić stated that yesterday’s ruling in the ‘Swiss franc’ case primarily raises the question of abolishing the currency clause, or rather restoring the role of the kuna as the domestic currency.

Commenting on the non-final ruling against eight Croatian banks, which lost a lawsuit at the Zagreb Commercial Court regarding loans in Swiss francs, Jurčić said that the ‘ruling is OK’ and opens a much broader process, as the currency clause has harmed the Croatian economy perhaps even more than the damage it has caused to citizens in this case.

It has raised the question of introducing the kuna and protecting the kuna as domestic money, where the Croatian National Bank (HNB) has allowed foreign currencies to take on the function of domestic money, thus permitting a kind of violation of Croatia’s monetary sovereignty, Jurčić believes.

The damage here is greatest for the Croatian economy, whose value cannot be reflected in either francs or euros, Jurčić said, adding that this ruling is a step forward in clarifying that situation.

He also emphasizes that domestic transactions are conducted in domestic money everywhere, and that the currency clause should only exist in international transactions, in order to protect, for example, the foreign partner in that transaction from devaluation.

If the kuna had performed its function as a catalyst, the economy would not be where it is today, and if the kuna were to regain its function as the domestic currency, we would very quickly emerge from the crisis, Jurčić asserted.

When asked whether, in his opinion, banks should accept a settlement with clients who have sued them, Jurčić said that this had been his proposal from the beginning of the dispute.

It would be good for banks to settle with citizens who, based on this ruling, could have the right to compensation, and how that will proceed will also depend on the strength of Croatian banks and global capital, which has been completely protected in Croatia, as all the risk has been transferred to Croatian citizens, Jurčić concludes.